Are hotel rooms elastic or inelastic?

Answer 1

Hotel rooms are probably quite inelastic. Many people have to travel, and have to stay someplace (I'm including motel rooms as a "hotel", since it makes sense that motel prices are likely to follow hotel price changes. If motels are considered different, hotels would be more elastic due to this substitute). Business travellers especially are likely to be unaffected by price - if they charge the room rate to their company, then it will not affect them at all unless their company forces them to choose a cheap hotel - something that is unlikely. If you need to find somewhere to stay, then you have to pay the price - no one will choose to travel and then live on the street because hotels are more expensive. Vacationers are probably the most elastic segment, as if hotels are too expensive they will probably not vacation, or go camping instead or some other alternative.